The Tesla-SpaceX merger explained

We got flying cars before GTA VI, and in today’s Finshots, we look at the possibility of a merger between Tesla and SpaceX, and explain what this potential $3.5 trillion conglomerate would look like.

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The Story

Last week, Elon Musk unveiled a new version of the Tesla Roadster that looked like something straight out of a science-fiction movie. The car comes with a bunch of rocket thrusters that make it briefly, for lack of a better word, fly.

Tesla says production is planned for 2028. But if the previous Roadster is anything to go by, that timeline is far from certain. Still, if we look beyond the car itself, the demonstration offered a glimpse of something bigger. Musk’s companies are beginning to overlap in ways that could bring them closer together.

Shortly after the demonstration, Musk publicly backed the idea of merging Tesla and SpaceX . If it goes through, the deal could create a conglomerate worth roughly $3.5 trillion, with businesses spanning electric vehicles, rockets, satellite internet, artificial intelligence, robotics and computing infrastructure.

To understand why Musk might want to combine the two companies, let’s look at where they’re headed. Tesla is increasingly investing in autonomous driving, humanoid robots, batteries and AI.

SpaceX, meanwhile, is moving beyond rocket launches and satellite connectivity. It’s expanding into large-scale computing infrastructure and AI, too. Musk believes that these projects could progress faster if the companies shared money, engineering talent, manufacturing capabilities and computing resources instead of developing similar technologies separately.

And there’s some merit to that argument.

The two companies are already more closely connected than ever before. For instance, xAI, which is owned by SpaceX, bought around $430 million worth of energy-storage systems, and SpaceX itself bought another $143 million worth of vehicles from Tesla.

Tesla also invested $2 billion in xAI in January 2026. When SpaceX acquired xAI, that investment was converted into SpaceX shares, giving Tesla a small direct stake in SpaceX. In other words, the companies already do business with each other and have overlapping financial interests.

Now, the case for a merger becomes more interesting when we look at how the two businesses are performing.

Tesla’s net profit fell by 46% in 2025 to around $3.8 billion, while its revenue stood at close to $95 billion. That puts pressure on its ambitions to build a fleet of autonomous cars and robots, both of which require huge investments.

SpaceX, on the other hand, generated about $14.6 billion in revenue and $4.4 billion in profit in the third quarter of 2026 alone. It also has more than $50 billion in cash and cash equivalents. With its businesses growing rapidly, SpaceX could give the combined group another source of earnings and cash.

This means that SpaceX’s cash-generating businesses could help fund Tesla’s long-term ambitions in AI, robotics and autonomous driving. At the same time, Tesla’s manufacturing and energy-storage capabilities could support SpaceX as it builds more infrastructure.

Take Terafab, for instance. It’s a semiconductor manufacturing plant in Texas that’s intended to produce chips for Tesla’s vehicles and robots, as well as SpaceX’s satellites.

Making these chips in-house could give the combined group greater control over the hardware behind its AI ambitions. It could also help the companies coordinate research and spending on projects that might otherwise involve developing similar technologies separately.

AI is another area where the two companies could work closely together. Tesla needs enormous computing power to train its Full Self-Driving software. It also needs vast amounts of real-world driving data to improve its models. Meanwhile, xAI has been building its own AI models and computing infrastructure.

Bringing these efforts closer together could allow the combined group to connect Tesla’s real-world data and physical systems with xAI’s AI models. Tesla’s vehicles and robots could provide the physical environment in which AI systems learn to operate. In turn, advances in AI could improve autonomous driving, navigation and how robots make decisions.

The same idea could extend to manufacturing Tesla’s Optimus humanoid robots, which are designed to perform physical tasks. xAI is developing the AI models that could eventually help these robots understand their surroundings, make decisions and respond accordingly.

Put all of this together, and the reasons behind the merger become clearer. Musk is trying to connect the entire chain, from custom chips and AI models to robots, vehicles, batteries, communications networks and the infrastructure needed to run them.

Each business could become a supplier, customer or technology partner to another. And if everything works as intended, the combined group could be worth more than the sum of its individual businesses.

But here’s the catch. Bringing all these businesses under one roof could also make it harder for investors to understand where the money is going.

Because you see, a merger might reduce duplication and allow the companies to share investments. But it could also make it harder for investors to distinguish between projects that generate returns and those that keep consuming cash.

After all, SpaceX’s plans could require enormous investments without generating returns anytime soon . So, Tesla shareholders who originally invested in an electric-vehicle and energy business would suddenly have greater exposure to rockets, AI infrastructure and other capital-intensive ventures.

Which makes you wonder: who actually benefits from this deal?

Musk owns roughly 20% of Tesla and about half of SpaceX’s shares, with 85% of its voting rights. This imbalance means that the two companies would have to agree on how much each business is worth, how shares would be exchanged and who would control the combined entity.

Even if the merger makes the business more efficient, the terms could still favour shareholders of one company over those of the other.

Sure, Tesla and SpaceX have set up special committees to review the deal. But questions about the independence of Tesla’s board remain.

Three of Tesla’s nine directors have notable connections to SpaceX or Musk’s wider business network. Musk leads both companies, his brother Kimbal sits on Tesla’s board, and Ira Ehrenpreis chairs Tesla’s compensation and nominating and governance committees. Ehrenpreis also joined SpaceX’s board in February 2026 while continuing to serve as an independent director at Tesla.

These connections don’t automatically make the merger unfair. But they make it especially important for the committees to negotiate independently and demonstrate that the deal’s terms are in the best interests of shareholders as a whole.

There’s also a practical hurdle the merger must clear. Tesla needs the support of shareholders holding at least 50% of all outstanding shares , not just 50% of the shares that are voted on. That’s a much higher bar because shares that aren’t voted effectively count against the proposal.

So if you zoom out, it could look like this merger could bring Musk a step closer to one of his biggest ambitions: establishing a human colony on Mars. But the bigger question is whether this vision would benefit public shareholders, too.

For now, it’s too early to tell. Musk may see Tesla and SpaceX as different pieces of the same puzzle, with a Mars colony as the ultimate goal. But whether putting those pieces together creates more value for shareholders will depend on what the merger actually delivers, not just the ambition behind it.

Until then...

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